Hot or not? Decline in WeWork bond values may suggest waning interest in startups

Value of bonds issued last week dropped sharply

May.May 03, 2018 11:30 AM
Adam Neumann (Credit: Getty Images)

Adam Neumann (Credit: Getty Images)

In a sign that perhaps interest in startups is waning among investors, the value of WeWork’s first bonds has dropped dramatically.

At the end of April, WeWork raised $702 million by selling new seven-year bonds, but they have fallen in value in the secondary market in just one week, the Wall Street Journal reported. On Wednesday, the bonds traded at 96 cents on the dollar, representing an 8.6 percent yield. Such a drop could mean it’ll be more expensive for WeWork to issue debt in the future.

Mike Kirkpatrick, a senior portfolio manager at Seix Investment Advisors, said fast-spending startups like WeWork and electric car-maker Tesla are “ultimately at the mercy of others,” and such a dynamic “can spiral out of control.”

WeWork, valued at $20 billion, currently has $18 billion in lease obligations, including $5 billion due by 2022. Bloomberg reported last month that the company doubled its revenues in 2017 to $866 million, but it also more than doubled its losses to $933 million. The average revenue it makes per customer declined by 6.2 percent to $6,928. [WSJ] — Kathryn Brenzel 

Related Articles

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

WeWork CEO Adam Neumann (Credit: Getty Images and iStock)

WeWork’s side businesses are fizzling

Sarah Pontius (Credit: Union College)

Another head rolls at WeWork

WeWork CEO Sandeep Mathrani and Softbank CEO Masayoshi Son (Mathrani by Neilson Barnard/Getty Images; Son by Tomohiro Ohsumi/Getty Images)

WeWork sues SoftBank for scrapping $3B bailout

Wesley Edens’s Fortress Investment Group picked up a mortgage bond portfolio for a steal (Credit: Drew Angerer/Getty Images, iStock)

Sharks circle as mortgage lenders shed portfolios at steep discounts

Softbank CEO Masayoshi Son (Photo by Tomohiro Ohsumi/Getty Images)

“Tactically, I’ve made regrets. Strategically, I am unchanged:” The Masa Son interview

Jetty's Michael Rudoy and Luke Cohler (Credit: Twitter; LinkedIn; iStock)

Rental insurance startup Jetty lays off 40% of staff

81 Prospect Street at Dumbo Heights (Credit: Google Maps)

WeWork shuts Brooklyn location after employee gets Covid-19